Walkability is Worth $100,000

Last summer my husband and I started going to open houses. Even though we hadn’t reached our house down payment goal yet, we wanted to start going to open houses to desensitize ourselves to the house hunting process. I want to become accustomed to house shopping so that when the time comes, I don’t get swept off my feet and tempted to spend more than our budget allows (a maximum of $300,000).

Going to open houses was eye opening and informative, but when the weather turned cold we didn’t attend as many (because brr). However, we didn’t stop going to open houses completely, which is where today’s story begins.

The open house in question was for a three bedroom, one bath home. It was built just after WWII but hadn’t been updated since the seventies. It had new siding and some new windows but was terribly dated inside. For those of you who are just tuning into my house hunt, dated is good because my husband and I plan to renovate.

The suburban house in question.

It had a decent sized backyard, a forced air furnace (good for an eventual heat pump conversion) and a fireplace in the living room. There was a park across the street and the area was pretty quiet. Best of all? It was listed for $189,000.

Sounds pretty perfect, right? Unfortunately, there is a catch.

It was in the suburbs.

Now, I know the suburbs are great for a lot of people. There is more space and homes are more affordable. But that affordability comes at the cost of walkability, culture, and proximity to amenities.

I don’t want to live in the suburbs. In fact, my husband and I only decided to go and look at this house because it was so darn cute and it was only a few minutes (by car) outside of the city.

However, as I did more research on the location, I realized that a second car would be mandatory. The area is not well serviced by bus routes, there is a massive hill between it and the city core (bad for biking) and there are utterly no amenities around it.

But it was so cheap! My husband, in particular, was taken by its cheapness, which led to an argument. He only saw the low list price, and was turning a blind eye to the fact that we would need a second vehicle, and car costs can add up.

Naturally, to prove my point, I made a spreadsheet, and here’s what I found.

Let’s assume we bought this house within the next six months for $185,000 (before I reached my down payment goal) .

A 10% down payment plus closing costs would mean we’d need $22,576 at closing. A 2.49% five-year fixed term with an amortization of 25 years would result in carrying costs of $1,405 including utilities, property tax, and insurance. That is stupid low and I love it. But, we’d also need a car.

We don’t buy cars new, but our current vehicle is in decline, so our next car purchase should be one that’ll last at least ten years, be four wheel drive, and large enough to fit a car seat. A price point of around $15,000 would be plenty. The car would need to be financed because we don’t have any designated savings, and I’m sure not going to dip into my emergency fund right after buying a house. So a $15,000 car financed over five years at 2.9% would add $268.86 to our monthly costs. Let’s not forget extra car insurance, maintenance, and gas. Here’s how it breaks down:

So this cheap house isn’t so cheap. Once a second car is factored into the mix, the carrying costs are much higher. It’s actually more than I wanted to spend on fixed costs and more than we’re paying now. There would also be the trade off of being far away from amenities, getting fat from a sedentary lifestyle, and dealing with traffic every time we want to go to the city.

$185,000 in the ‘Burbs is Worth $280,000 in the City

For interest’s sake, let’s look at what $1,953 per month will buy in the city. To be fair, we’ll keep the down payment the same at $18,500.

If we bought a house for $280,000 with $18,500 down, that would result in carrying costs of $1,953. Here’s the closest example I could find of a home selling for $280,000.

The city alternative.

This home is almost precisely the same, except in slightly better shape. It needs updating, that’s to be sure, but it is entirely liveable. It has three bedrooms, two baths, a large backyard, and plenty of parking. It’s not very close to downtown but it’s still near many parks, restaurants, and other amenities, and is easy biking distance to downtown, which means my husband and I could safely remain a one-car household.

Personally, I would prefer to stay in the city, put more money into an asset that won’t depreciate to zero (as cars are known for), and maintain my physically active lifestyle. It’s not for everyone, but that’s my preference. I guess you could say a walkable neighbourhood is worth $100,000 right off the bat, without factoring in other ongoing costs.

The suburban house was perfect, but not for us. The house hunt continues.

How much would you pay for walkability? Have you or would you choose the suburbs or the city? I want to know!

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You know what they say, real estate is location, location, location! I wouldn’t even consider a home that wasn’t in a walkable area, but that’s because I’m not much of a driver. In general, I feel like if you want to live in the city, wait until you’ve saved enough to live in the city. Transaction costs of buying and selling a house are high enough that it’s better just to get it right to fit your desired lifestyle the first time.

The other thing to consider is the fact that (esp with renos) you’ll have better resale in city. I love the city but I dont think we’d ever live in heart of city because all of our friends and family are in outskirts and we want way more privacy than the city can offer. This is something that never bothered me until we bought a house, but i HATE playing in our back yard, maria in her pool, or even us struggling to unloand a full vehicle and having our neighbors literally staring at us…Bedford does have some nice mature properties but the bedford bottleneck kills me. Mike works in burnside which is very easy to get to from almost anywhere and im pretty transportable but enjoy working DT for now. DT dartmouth (walking distance to ferry) appeals to me but again we’re into smaller lots and privacy issues that we crave. I’ve been commuting to halifax since 2003…it’s just what i do and have forgotten the luxury of working close to home.

The privacy thing doesn’t bother me at all, but I can absolutely see how that would be a huge issue for someone that cares. Most of the homes I’ve looked at have no privacy and you’d have to learn to be on good terms with your neighbours!

I think if I was going to live “out” of the city, I’d live way, way out. That way you’d get the peace and quiet and affordability.

Also, most of our friends live in the ‘burbs now too, and I find it strange commuting out to visit them!

I am 100% with you on this. I cannot stand living in a place that is not walkable. I grew up in a rural area, and when the sun went down, that was it: you were in for the night, unless you wanted to get into your car, make up a fake errand, and drive there and back just to avoid going stir-crazy. But now that I live in a city, I can just walk out the door onto the lighted sidewalk and go wherever I want. 🙂

I agree Sarah! I used to live in a very rural area and forget walking on the road after dark – totally not safe. And even walking during the day – there was no place to go!

Lau

This article is so relevent, except for when it can’t apply to your situation :(. I just bought a house in the suburbs because me and my fiancé don’t work in the same city. We both need a car because we work on a rotating shifts schedule and there’s not public transit available at night (well I’m a teacher but there’s always the possibility of monitoring internship in the evening).

I work in Montreal, so basically we could buy a house in Montreal and only have one car for my fiancé. Unfortunaly, houses in Montreal, even 100k higher, are old and ugly and overpriced compared on what you can find in the suburbs.

I still want to be active and frugal while living in the suburb. My fiancé’s car is all paid for and I’m trying to get rid of my car loan asap. I plan to keep that car as long as I can and to extend it’s life, I’m going to use public transit as much as I can too and I’m thinking about biking a lot. Maybe one day if we ever both work in the city we’ll move there, but for now, suburb was the only choice :(.

The suburbs are certainly a good choice depending on your living arrangements. My husband works in the suburbs right now and he needs his car because public transit isn’t running when he starts his shift. Ideally though, some day we’d like to engineer a lifestyle where we both work in the city and he doesn’t need to drive at all. Something to work towards.

My fiance and I bought a house and lived in the suburbs for the past two years. We were far away from “things to do” but also far way from “ways to spend money.” We go out to eat alot less than our peers in the city and cook almost all our meals. Instead of going out on weekends, we sometimes just hang out and watch netflix, read, drink coffee, or walk the dog. That is something you may want to factor into your budget. Would a bit of isolation save you money on the other side of the coin. You are dead-on about the double car cost though. Unless one of you works in the suburbs too, you’ll need the two cars and those expenses add up.

I have done both MB, I’ve lived in a super rural area where an impulse
buy would require a 15-minute drive, and I’ve lived in an urban center.
Living in the city certainly opens us up to temptation more,
fortunately, we built up some pretty good frugal willpower in the
country and we don’t overspend too much. We also operate on a cash-only
diet which helps keep our spending in check.

I'm a part time runner, yogi, local foodie and personal finance aficionado. I blog about handling money as a debt ridden millennial. [read more]

My Money Facts

Starting Debt: $37,987.65Current Debt: $0.00
I paid off my original debt in just 24 months.